My question is to the Canada Pork International and Canada Pork Council.

You spoke pretty extensively in your submission on the Korea trade agreement. If anybody else has brought this up while I was out, then I'll go to the record. But where are we at right now on the Korea trade agreement? As I see it, the Americans have their free trade agreement, and as each day or month passes, we will find ourselves being non-competitive in Korea. What's the value of that market to us? Where are negotiations at? Do you know why the government seems to be, from my perspective, just not putting enough emphasis on this Korea deal? We have the minister flying all over the world, but this is the key deal. We can't afford to lose markets we're already in.

The value of that market is $300 million. But since the Americans implemented their own free trade agreement, and the European Union, we've seen in the last two months our sales really drop. And what we're seeing also, on top of that, is we are losing the value-added end of that market. It's going back to the very cheap, very low-value products. That's where we stand this time in terms of business deals.

We have met with the Canadian negotiators. We understand that the Canadian head negotiator is likely.... He's in Korea now or next week?

We appreciate that, we're okay with the whole situation. We are pleased with the fact that the Canadian government is now seeking to get the Korean government re-engaged in discussions. But the problem also was the political situation in Korea. The Korean government, to everybody's surprise, got the majority in the government. Because otherwise, if the opposition had taken power, we don't know where we would stand at all, because they were threatening to scrap even the trade with the U.S., which might have been a good thing for us, but that's not the case.

We know that the Canadian negotiator is trying to get his counterpart to re-engage. There is a counterpart who has been nominated by the Korean side, and we've been told that they would try their utmost to get the same deal as the Americans in terms of a schedule, especially to make sure that we are not lagging behind for a year; otherwise we will be out of that market for 15 years.

Just so that everybody understands this, we actually have the same problem in our small little beef plant in Prince Edward Island. Profitability in the industry, at least at the processing level, means getting rid of the total animal. When you're talking value added, I expect you're talking, in terms of the Asian market and the Korean market, of products of the animal that Canadians don't normally eat.

I was in Brandon's pork plant, where they kill 9,600 I think in an eight-hour shift. In the room was the stuff that goes to the Asian market. As McCain said, that is our profit centre, because you're making full utilization. Is that the case for both of you? I think when you talk about value-added market, we all think that it's the prime cuts, the T-bone steaks, the pork chops—

I wouldn't entirely discount the premium stuff as well. There are different segments of the Japanese market. They have what they call their beef bowl restaurants, where they basically have some beef and rice that are cooked up with some other things. For that, they really use the lean beef: the shoulders, the hips, and the briskets are important. There's also an important market for the middle meats, which they slice very thinly, and they have the kinds of restaurants at which you take the thin slices and barbecue them yourself. Those are all very significant. So there are good opportunities for all of those in Japan.

The key is, even on those high-end steaks like the rib-eyes, if Canadians want to pay say seven dollars a pound and Japanese consumers want to pay twelve dollars a pound, where would you want to send it? You want to get more money. And maybe that will encourage the Canadians to pay a little more back home as well.

John, you mentioned—and I wasn't aware of this—this thing you called a trigger point. As I understand it, if you hit a certain quota, a certain level, then the government can increase the tariff levels. Is it the same for pork?

What's the key point in the negotiations of an FTA? You used a different name, rather than an FTA. What are the key negotiation points that your industries have to get out of this negotiation?

I was interested, Mr. Vincent, in your comments at the start about how this trade with Japan goes back about 40 years. I think you've been involved for 40 years. Maybe you were one of the trigger points of that. If you were, congratulations. It has been a success story. I think we're trying to build on those successes we have had with one of the most important sectors we have in Canada.

Part of what you talked about earlier was a Canadian quality assurance program. With that, you were saying that we're getting a larger share, but it does require further food safety requirements for pork. As we move into it, do you see the Japanese requiring higher standards for either beef or pork, going forward with this agreement?

Japan has been a market for Canadian pork producers for a long time, that is, for over 40 years. Therefore, it is an important market. In fact, the Japanese pay more, which is why it is an important market for Canadian producers. However, the Japanese are willing to pay more only for quality products. When they visited each of Canada's provinces, they explained what their needs were to Canadian producers, who responded to that need and used the necessary equipment to meet the highest standards of quality and safety. This is why the Japanese market is so important to us.

That is why it is all the more important that Canada negotiate a free trade agreement before the United States. American policy on exports and the development of free trade markets is very aggressive. This is why the Prime Minister announced—and I was there—during his visit to Japan a few weeks ago, that negotiations would be undertaken to maintain and develop a new partnership with Japan and with other countries, including Korea. Indeed, Korea is also an important market for Canadian producers.

You also have to understand that these past years have been difficult for producers because of the fluctuations of the American dollar. As a result, the Canadian dollar hit parity with the U.S. dollar. As well, the price of grain increased because of energy policies which were put in place. In short, in the last four years, Canadian producers took on a lot of debt to maintain their markets. This shows how important it is to keep these markets and to enter into free trade agreements with many countries, including with Japan, which is a demanding and lucrative market. Nevertheless, Canadian producers have demonstrated that they are able to meet the requirements of that market.